Italian Banks Urged to Boost Technology Investments

By vicky684 Wednesday 24th of July 2024
ROME, May 31 (Reuters) - Larger Italian banks' investments in technology fall short compared to their European counterparts, the central bank stated on Friday, urging banks to increase their spending to foster innovation in financial services. Despite a four-fold increase in innovative technology investments since 2017, Italian banks' efforts are still inadequate, according to Bank of Italy Governor Fabio Panetta in his speech at the presentation of the central bank's annual report.

"They must expand their investments: continuing to lag in this area would be a grave error," Panetta emphasized. He noted that banks with robust digital capabilities can diversify their revenue streams and capture more market share in lending. Italy's largest bank, Intesa Sanpaolo (ISP.MI), plans to invest 5 billion euros ($5.4 billion) in technology from 2022 to 2025, transitioning to a cloud-based core banking IT system, successfully tested at its new digital bank. Italy's second-largest bank, UniCredit, which outsourced its IT infrastructure a decade ago, aims to spend 2.8 billion euros on technology between 2022 and 2024. In comparison, Spain's largest bank, Banco Santander (SAN.MC), announced in 2019 it would invest around 20 billion euros in digital and technology.

The Bank of Italy has increased its oversight of IT outsourcing contracts, including conducting on-site inspections. Panetta noted a significant rise in severe cyber incidents reported by financial institutions last year. "The financial sector is a prime target due to its reliance on digital data and processes," he said, highlighting that geopolitical tensions and actions by nation-states exacerbate cyber risks.

The Bank of Italy also pointed out that technology is crucial for cost savings and reducing service charges for customers, with online account costs averaging 60% less than traditional accounts.